Innovation Shouldn't Shut Out Cash Payers

A new digital divide is emerging for the millions of Americans without a bank account or who pay for goods and services with cash—and technology will be key to bridging it.

Of course, there’s been no shortage of innovation in electronic payments. Services such as Google Wallet, Stripe, Square and Braintree help widen the payment options for consumers and businesses, but they are largely built on top of the credit card networks and offer little for people who don’t use credit cards. More and more people are also growing wary of swiping their credit cards after a spate of major security failures at retailers such as Target, Michael’s and Neiman-Marcus. At least a third of shoppers reported in a Balance Innovations survey that they will use cash more frequently to pay for goods.

Much of the world of commerce and finance has gone digital at a rapid pace, bringing consumers a range of conveniences, from Internet shopping to check cashing via cell phones. Consumers with access to a credit card, a bank account and a smartphone can largely enjoy that world from anywhere. But for an estimated 60 million people who don’t have access to secure financial services in the United States, conveniences like paying for goods and services online, procuring a loan or even obtaining a credit score remain elusive in the digital economy. Whether it’s because they can’t afford the fees associated with banks and credit cards, or because they prefer to protect the privacy and security of their purchases, a massive group of Americans are effectively cut off from technological advances that should include everyone.

But it is not just cash consumers who can find themselves on the wrong side of the divide—businesses that fail to meet the needs of the cash-preferred population are also missing out on opportunities to increase their market share.

Cash transactions comprise nearly half of all payments in the United States, according to estimates from MasterCard. Many people choose to transact mostly in cash because it gives them greater control over their finances and helps reign in overspending. In fact, one MIT study found that consumers who use a credit card could spend as much as 100 percent more than they would with cash. Still others prefer to pay with cash to avoid discussing discretionary purchases of gifts, shoes or even a fishing rod with a spouse or partner.

No matter what the motivation is, cash shouldn’t be any less convenient to use online than offline. And it surely shouldn’t be less convenient or more expensive to accept than other forms of payment. Businesses, landlords, utility companies, lenders and other businesses can benefit by moves such as digitally extending their network of cash collection points, which can add convenience for consumers.

Whether it be cash-only payers or the underbanked, consumers shouldn’t lose out on the conveniences afforded by the modern digital age. Financial inclusion is advancing with innovative technology offerings like ours and others dedicated to this case, but we need to do more to narrow that technology divide so that businesses and all Americans can benefit.

Danny Shader is CEO of PayNearMe.

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I could not agree more with Danny. We recently partnered with PayNearMe and today we have one of our customers making the first repeat payment utilizing the network. This payment is coming from Baton Rouge, LA all the way to Nebraska. Late April this same customer mailed a money order payment on April 28, 2014 and we did not receive it until May 8, 2014.....even though he sent it USPS express at a cost of $5.60!

The first time this customer made a payment a PayNearMe payment on June 2, 2014 and we processed that payment on June 3, 2014. Now he is making a second payment and while he made it on June 6, 2014, we will be processing it today and he will get credit for the June 6, 2014 date.

This is a winning situation for the State of Nebraska, for our paying customers, and for our child support recipients who get these monies so much quicker utilizing the PayNearMe network!

Thanks Danny

Posted by TroyAR62 | Monday, June 09 2014 at 11:33AM ET

Thanks for the glowing endorsement, Troy! Our whole team is very excited to be supporting you and your colleagues in Nebraska.

We continue to hear similarly positive feedback from municipalities and other government agencies, lenders, property managers, and a wide range of other payees who value enabling their payers/consumers to pay with cash, error-free, 24x7 from thousands of payment locations nationwide.